What is a merger? Identify and describe three different types of mergers.

A merger is the combination of two organizations to create a third organization.
Horizontal merger: the merging of two competitors. The competitors combine to increase market power. These mergers are subject to review by regulators who fear monopoly in the marketplace (for example, the merging of Coles Books and Smith Books to form Chapters, which was then acquired by Indigo).
Vertical merger: the merger of a buyer and seller or supplier. These two merge to achieve synergies by controlling all factors affecting the company’s success, from the production of raw goods to manufacturing to distribution and sales. The example provided is the merger of a real estate agency with a real estate developer.
Conglomerate merger: the merger of two organizations competing in different markets. These are different businesses competing in different markets.
Acquisition: the purchase of a company or a controlling interest in a company.
Consolidation: two or more organizations join and form a new organization. A third company takes on the assets and liabilities of both companies, usually after the original companies are dissolved (for example, Metro Toronto Hospital consolidations).
Takeover: one company acquires another company. Usually a takeover refers to a hostile transaction, but it can mean a friendly merger as well. A hostile takeover refers to the acquisition of a company against the wishes of management.